TigerHawk

TigerHawk (ti*ger*hawk): n. 1. The title of this blog and the nom de plume of its founding blogger; 2. A deep bow to the Princeton Tigers and the Iowa Hawkeyes; 3. The nickname for Iowa's Hawkeye logo. Posts include thoughts of the day on international affairs, politics, things that strike us as hilarious and personal observations. The opinions we express are our own, and not those of each other, our employers, our relatives, our dead ancestors, or unrelated people of similar ethnicity.

Friday, July 31, 2009

I'm having an Arlo Guthrie day

By TigerHawk at 7/31/2009 10:40:00 AM

So, this morning on a total whim I slipped Arlo Guthrie's Greatest Hits in to my car's CD player on the way to work and chuckled along to "Alice's Restaurant," which I had not heard in years. Then, this link comes across my Facebook scroll, an interview in which Guthrie reports that he became a registered Republican four or five years ago.

A short note on GAAP fetishism

By TigerHawk at 7/31/2009 07:32:00 AM

Glenn Reynolds links to a bit of commentary by David Pauly who says that "Wall Street analysts ... continue to promote earnings lies." The supposed evidence is that analysts are adjusting their own models to reflect earnings that are not precisely according to generally accepted accounting principles (GAAP):

Instead, their earnings estimates ignore often huge expenditures that can’t help but affect a company’s health.

In analystspeak, Intel Corp. wasn’t hit with a $1.45 billion fine from the European Union in the second quarter for anticompetitive practices.

After setting aside funds to cover the fine, which Intel is appealing, the semiconductor-maker had a quarterly loss of $398 million, or 7 cents a share. Disregarding the fine altogether, analysts maintain the company earned 18 cents a share, beating their average estimate of 8 cents....

General Electric Co., which makes jet engines and electric power equipment and has a financial services arm, had a second- quarter profit of 24 cents a share. GE and the analysts emphasized earnings from continuing operations, which at 26 cents a share, exceeded their estimate by 2 cents. A $194 million loss from discarded businesses was discarded.

Wall Street’s big earnings lies must exasperate investors. They already have lost faith in the reported earnings of banks that are the center of the financial system.

Both the substantive complaint -- that analysts value companies on a basis other than GAAP -- and the conclusion -- that "Wall Street's big earnings lies must exasperate investors" -- are uninformed at best, and typical business journalism at worst.

Accounting is, by its nature, retrospective. It tells you what a company did. Investing, the business of analysts and the portfolio managers who read what they write, is prospective. Investors in liquid public stocks do not really care what happened, they want to know what will happen. Accounting does not tell them that; it can only give clues about future performance by describing past performance in a particular way. In order to turn historical results -- inherently useless information to investors -- into a useful prediction of future results, investors require analysis, not the superficial regurgitation of GAAP results. Securities analysis is an art, but at its center is the idea that some information about past performance is less predictive of future performance than other information. So, for instance, if a company earned $500 million last year and lost $200 million this year, it is important to know why. If the reason is that it had to pay a $800 million fine for an offense that it is unlikely to repeat, then it is reasonable to say that for the purposes of predicting future performance we should regard the company's core earnings as having increased 20%, notwithstanding the requirements of GAAP.

Furthermore, there is powerful evidence outside Wall Street "sell side" analysis that untweaked GAAP is not useful for making predictions: Lenders, who do not care a wit about the stock price, do not use strict GAAP measures when assessing the creditworthiness of a prospective borrower or in the calculation of financial covenants under loan documents. GAAP, it turns out, is no more perfect a device for credit analysis than it is for stock analysis.

Then there is Pauly's idea that "Wall Street's big earnings lies must exasperate investors". This is silly for at least two reasons. First, the only investors who really matter (in the sense of dollars involved and ability to affect a stock's price) are institutions (mutual funds, pension funds, and hedge funds), and they perform their own analysis. Sure, institutional investors are interested in what Wall Street analysts have to say, but they take it with a huge grain of salt. They use Wall Street analysis as an input into their own work, and often write internal reports that far exceed the quality of the "sell side" stuff that Pauly is complaining about. Pauly would no doubt be appalled to learn that "buy side" institutional analysts often further adjust GAAP results, both by rejecting some of the adjustments suggested by companies and sell-side analysts and, no less frequently, making adjustments of their own. Why? Because institutional investors have very different philosophical approaches and time horizons. You are going to make a different prediction about a stock and care about different things if you are willing to hold it for five years rather than five months. The former investor might be happy about heavy spending on a clinical trial for a product that will not launch for three years, and the latter might hate it. That's what makes markets.

Second, this idea that one analyst's shoddy argument amounts to a "lie" that might actually deceive somebody is a fantasy of prosecutors and journalists, but silly in the real world. Even the now diminished community of sell-side analysts is a cacaphony of different voices and competing opinions (opinions being the operative word, by the way); fourteen different analysts write coverage on my own company, and there are at least ten different opinions among them about the relative importance of different financial measures. Is it revenue growth that matters, gross margin, net margin, operating cash flow, EBITDA, or EBITDA adjusted to exclude equity-based compensation? Any investor who pays attention to just one voice is an idiot, and deserves to lose his money.

The recent claim, popular among journalists and prosecutors, that financial information that is not GAAP is somehow a "lie" is itself, well, a lie. GAAP sets a baseline, a minimal standard for financial information that every public company must produce. That attribute of GAAP results does not magically render them into a perfect device for predicting future results. Other information is required to do that, and some of that information is financial. An opinion about a company's prospects based on non-GAAP information, financial or otherwise, is not a "lie," it is an opinion. There is still a difference between the two.

Facebook factoid of the day

By TigerHawk at 7/30/2009 10:24:00 PM

This evening I had drinks with a couple of college classmates whom I did not know while we were undergraduates. One of them is fairly plugged in to Princeton's alumni development organization, and he dropped a factoid that reveals a great deal about Facebook's enormous power among the young: Of 1253 rising freshmen at Princeton, 1240 are already on Facebook.

Eliot Spitzer finds some new friends

By TigerHawk at 7/30/2009 02:53:00 PM

Eliot Spitzer, the disgraced former governor of New York and bane of Wall Street, and Sallie Krawcheck, the former chief financial officer who made Citigroup what it is today, have teamed up under the auspices of CNN to "take on Wall Street." It is hard to imagine what we might possibly learn from either of them, except maybe that a smart and ruthless prosecutor can use the Martin Act to do just about anything. It is also hard to imagine why Sallie Krawcheck would want to depreciate whatever cachet and credibility she has left in the corrosive company of Eliot Spitzer, who desperately needs somebody to take him seriously. It is, however, much less difficult to imagine what Spitzer sees in Krawcheck...

Presidential brewskis

By TigerHawk at 7/30/2009 01:09:00 PM

In the now-famous "beer summit" that is supposed to clear the air after Gatesgate (and, presumably, rebuild the president's now shattered cred in the law enforcement community), even the brands of beer are on display, no doubt for their iconic significance:

The president, we are told, will be drinking Bud Light, Crowley will have Blue Moon, and Gates will have Red Stripe — Red Light and Blue.

Barack Obama drinks Bud Light? Puh-lease. He will be the first graduate of Harvard Law School to drink Bud Light this summer, if not this decade, and that is because Bud Light is so flavorless as to be pointless. Either Barack Obama does not know what good beer tastes like or he is forcing down a few sips of Bud Light because he thinks it will play in Peoria. Or wherever.

White roofs and other easy answers

By TigerHawk at 7/30/2009 07:37:00 AM

The New York Times has a story on its front page this morning touting the nascent effort to build roofs with lighter or even reflective material, both to save energy and to increase the reflectivity of the planet's surface, especially in urban "heat islands." This issue has been a hobby horse of mine for years, in no small measure because I believe it to be a low-cost and reversable means of conservation; whether your motivation is to mitigate global warming or to save Adirondack fish or to defund the Wahabbis or simply to avoid waste, gradualist steps like this are good policy (and certainly ought to be tried before "cap and tax").

That said, it disappointed me that the story did not address the problem of local building codes and restrictive covenants for aesthetic purposes, both of which would block the use of new roof technology in communities all over the country. Much as the idea offends my love of freedom of contract, it is hard to see how we will get "cool" roofs in many places without a federal law that preempts regulations or contract provisions insofar as they prevent the installation of energy-efficient materials.

Wednesday, July 29, 2009

Advertising that fits the advertiser

By TigerHawk at 7/29/2009 08:48:00 PM

So, the New York Times is incongruously advertising for home delivery subscriptions on Fox tonight, which is in theory a waste of money if you believe, as is received wisdom in the Grey Lady's core audience, that Fox is a teeming hive of scum and wingnuttery. The best line in the ad comes from some unctuous tool who declares that "The Times has the best journalists in the world. There is no debating it."

No debating it. Captures the paper's general attitude rather well, I'd say.

Tuesday, July 28, 2009

Stimulus math

By TigerHawk at 7/28/2009 11:42:00 PM

In the cause of stimulating the economy, a motive that seems to justify just about any tomfoolery these days, the State of Oregon has spent $176 million to create a minuscule number of jobs. Warren Mayer asks the essential and obvious question that never occurs to the credulous or at least innumerate reporters who write these silly articles.

Professor Gates and the IRS

By Escort81 at 7/28/2009 06:40:00 PM

TaxProf posts that a foundation created by Henry Louis Gates, Jr., has had a minor problem with the IRS, and amended its 2007 federal tax form. A bit of cash was made available to insiders, and resulting expenses are relatively high.

Looking at the house he rents from Harvard (Google Maps Street View here), it might be wise to remind Professor Gates that to the extent enjoys a below-market rent (a nice perq, that), the difference between the rent he pays and what he would otherwise pay in an arms-length market rate lease could be construed as taxable compensation, if I am not mistaken. The house on Ware Street in Cambridge near Harvard Square would have a fair market value of well over $1 million, perhaps over $2 million, and a commensurate rent rate would be at least $7,500 per month. If he holds classes there or maintains his official academic office there, that would help him -- it would not be treated the same as if it served solely as his residence, I believe.

Climate change reading of the day

By TigerHawk at 7/27/2009 12:40:00 PM

Richard S. Lindzen, the Alfred P. Sloan Professor of Atmospheric Sciences at Massachusetts Institute of Technology, explains for a popular audience why climate alarmism is a crock, and the motivations behind those who promote it. Professor Lindzen, I should say, is the rare academic who uses his tenure for its supposed purpose, to take controversial positions that threaten his own specialty's conventional wisdom.

Can Kent Conrad count?

"'Look, there are not the votes for Democrats to do this just on our side of the aisle,' said Sen. Kent Conrad, D-N.D., the chairman of the budget committee."

I think what he means to say is that there are perhaps three or four or five dozen Democrats in the House and a bunch in the Senate who don't support the bill in its current form. Because, otherwise, since the House is currently 256 to 178, and the Senate is 60 to 40, both in favor of the Democrats, Senator Conrad might need to work on his elementary school level math skills. Of course there are enough Democratic Members of Congress to pass a bill without a single Republican vote, so what is the reason for the "our side of the aisle" language?

Destimulated roads

By TigerHawk at 7/27/2009 06:52:00 AM

If you've spent any time driving in states with powerful construction unions or large Democratic constituencies, you can see the stimulus package at work. Roads have been ripped up all over the place, but you do not see a lot of new asphalt going down. The result is traffic jams, wasted -- eek! -- carbon, exhausted kids, and, I assume, spousal recriminations over navigational choices gone wrong. If this impression is correct (and everybody I spoke with this weekend supports it), what is going on?

One theory advanced by an employee in our company whose husband is a road contractor is that there has been too much rain in the northeast, and too few puddle-free days, to put down new pavement. In this telling, Allah is trashing our summer in two ways, by ruining our day at the beach and our drive home.

Another theory is that there is a national asphalt shortage, and that the government officials who kicked off these supposedly "shovel ready" projects failed to account for it. This strikes me as fairly inexplicable, insofar as the national shortage of asphalt was well known last fall when Barack Obama's stimulus package was but a gleam in Nancy Pelosi's eye. From November 9, 2008:

Expect a bumpier drive. An asphalt shortage is delaying road maintenance projects in communities nationwide. Asphalt is becoming scarce as U.S. refiners overhaul their equipment to maximize output of highly profitable fuels such as diesel and gasoline, using inexpensive — and hard to process — crude oil....

Dozens of road repairs were delayed last summer and municipalities around the country may face another shortfall next summer. Road-maintenance projects that have gone forward cost significantly more as the price of asphalt nearly tripled over the past year.

Apparently "shovel ready" was the wrong metric. We were shovel ready, and even jackhammer ready, but we were not pavement ready.

Delays on the highways are very costly, even in mere dollars. People burn more gasoline and cancel trips they otherwise would take. More importantly, shipping costs go up. Not only do the truckers use more fuel and pay more wages per mile, but delays have knock-on effects in our just-in-time economy. Are there factories that lost a shift because they were missing an input that was stalled on Interstate 81?

All of this waste is a not insubstantial "tax" on the economy. The only question is whether it has outweighed the benefits of the poorly-planned "stimulus" that caused it.

Coulter puts a stake in the birthers, and Huckabee rams it through

By TigerHawk at 7/27/2009 06:03:00 AM

We have not written much here about the "the birthers," the conspiracy theorists who claim that Barack Obama is not a citizen and therefore ineligible to serve as president of the United States (the Constitution requiring as it does a "natural born citizen"). It is a silly story, and no conservative of any stature subscribes to it (unlike, for example, the fairly prominent and putatively respectable people on the left who denied Trig Palin's maternity). The persistence of the story in the media seems more like a strategy to discredit conservatives by associating them with cranks than a real effort to get to the bottom of the theory. See, e.g., Ann Coulter and Mike Huckabee mock the birthers below, and the lefty on the panel saying that he hopes the story has legs:

Sunday, July 26, 2009

GatesGate: A short note on race and class

An African-American friend of mine gave me permission to share part of an email he wrote to various friends in the wake of Henry Louis Gates' close encounter with the Cambridge constabulary:

Funny side story: Last summer, I had a couple of guys out on my boat one Saturday... I call them my Jamaican posse... well because they are crazy wild-partying Jamaican guys by night (hedge-fund guys by day). Well here is a small yacht with a bunch of black guys hauling up the East River with a cargo of blond Eastern European chicks [hey those were their dates... not mine... for those who know I am happily married to a brunette], blasting Reggae, gyrating to the beat, and popping champagne all the way [up] the L.I. sound. I thought beyond a doubt we were going to be stopped somewhere along the way - I mean it would just be too tempting to pass up - even just out of boredom and curiosity if nothing else. Nope, not even a sideways glance from the cops or Coast Guard - go figure. So much for my racial profiling predictive powers.

Anyhow, I have to agree with Obama (and we don't agree on much lately) that the police acted stupidly. Was this a racially motivated arrest? I would say its fuzzy, but yes, I think so. The reason I say fuzzy is that the relationship between cops and the elite white population in university towns is always tense. For example, I was on Princeton's rugby team and every year we'd play the town cops and firefighters in one horrific grudge match. This was the biggest legal orgy of class warfare violence I have ever seen or participated in (and still feel the old injuries from those matches). The basic objective of the game (at least for the cops) was to send as many students to the hospital as possible. It was so bad, we kept 2-3 ambulances in the parking lot on standby at the game (and they were kept busy).

Learned a lot from this - Why did these guys basically want to maim a bunch of (mostly) white snot-nosed teenagers. You had to see the shear glee on their faces every time one of us got carried off the field with blood spurting from his nose. It's hard to convey the total barbaric scene. Tells you a lot about these people, their motivations, what chips they carry around on their shoulders. It also showed me that the problem attitude is not all about race - its much much more complicated than that. Gates of all people should have understood the situation and the potential consequences. Either he did and decided it was worth standing up to his antagonist, or he was blinded by his own celebrity.

Of course, in the rugby match, Princeton always won the game - after all the cops might have been big-muscled and thick-necked, but they were old and slow, and we were young, fast and better skilled. I guess risking life, limb, and spine for the sake of defending our Ivy League honor was worth it. Stupid.

Suffice it to say that the Princeton Borough cops go out of their way to bust on the undergraduates, at least according to my between-the-lines reading of the weekly police blotter report in Town Topics.

Anyway, what do you make of my roommate's perspective (picture of the guy here)?

Waterloo?

By Escort81 at 7/26/2009 12:12:00 PM

President Obama cited Senator DeMint's (R-SC) comments last week, with DeMint saying that stopping the health care reform bill would be Obama's "Waterloo." The August recess deadline has been blown, and there is some feeling that Members of Congress will get an earful from their respective constituents while on recess.

I still would be reluctant to bet the ranch that there will not be a bill passed this year, although the probability has diminished. President Obama maintains a robust account of political capital, and the Democrats easily control both houses of Congress. Republican obstructionism in this matter is a myth -- it is a Maginot Line of politics. If the bill does not get done, it is because Democrats on the Hill could not get their act together -- that the battle remains unresolved between the True Believers in Pure Single Payer Nationalized Health Care (such as Rep. Jan Schakowski of Illinois) and Pragmatists who would like to find a way to cover most uninsured at some reasonable cost and reduce the rate of growth in health care expenditures overall.

So, the battle and the debate will continue after the August recess. That shouldn't stop us from enjoying a nice ABBA clip from more than three decades ago:

Bad economic factoid of the week: Vacant housing

According to the latest data, the number of vacant U.S. homes touched 18.7-million in the second quarter. That is a daunting figure, of course, but it is more fun to put it in context. Assuming four people per household, the U.S. currently has enough surplus housing to put the entire population of the U.K., with room left over for Israel.

Of course, we are a huge country and they are not, and the linked article notes that the true vacancy rate (all houses empty and for sale) actually fell in the second quarter to 2.5%, down from 2.9% in the six months ended March 30. The aggregate number also includes vacation homes and such, which are rarely used. That does not necessarily indicate trouble; it could just as easily reflect prosperity.

More Gates

By Escort81 at 7/25/2009 12:21:00 PM

It turns out that the controversy surrounding the arrest of Henry Louis "Skip" Gates, Jr., by Cambridge police sergeant James Crowley is nothing more than a donnybrook between distant Irish cousins, which really explains a great deal. President Obama's solution to have both of them come to the White House for a beer sounds like the perfect idea. Then, bring in Oprah for a live 10 minute segment -- and toward the end of that, Rahm Emanuel comes on set, and he can use the line made famous by the fictional character Ari Gold (of the HBO series "Entourage", played by Jeremy Piven, and based upon Rahm Emanuel's brother Ari Emanuel, the prominent Hollywood agent): "Let's hug it out, bitch."

Since we first blogged about it (with updates following the original post as more information came forth), the profile of the story was raised considerably when President Obama was asked a question about it during his press conference this week, remarking that the Cambridge police "acted stupidly," and then clarified his statement on Friday. I think Cardinalpark's comment captures nicely the concept that this had less to do about race and more to do about privilege. (It has to do with race only insofar as the initial report to the police described "two black males" trying to gain access to the house, and Dr. Gates matched that description, and was therefore reasonably a suspect until such time as he established his identity as the resident; also, it has to do with race to the extent that Dr. Gates, as wise a man as he might be, could not at that moment set aside his own baggage vis-a-vis the police). Sgt. Crowley's background and history do not reveal any racist sentiment -- quite the contrary -- trying to save Reggie Lewis's life with CPR, teaching about racial profiling at a police academy, so it was not correct for Dr. Gates to sling racist accusations.

Setting aside race, there is still the question of why Dr. Gates was arrested for disturbing the peace in his own home after his identity was known -- which is at the core of the matter here -- and the answer to that question is directly related to the question of exactly how much crap and verbal abuse a policeman has to take from an unhappy resident in that situation. That may vary from town to town and police department to police department (depending upon training and procedure), but a strict libertarian view might be that a policeman without a warrant has to leave a residence as soon as he is asked, or as soon as his business of investigating a possible break-in is completed, no matter how poorly the resident may treat him. I am not so sure that the law or police procedure ought to make it such that a policeman must take an unlimited amount of verbal abuse, and that there should be reasonable limits, but clearly there is no story here if Dr. Gates left yelling on his front porch uncuffed, as Sgt. Crowley and his colleagues drive away.

Friday, July 24, 2009

Wings of eagles

By TigerHawk at 7/24/2009 09:21:00 PM

We are back at our place in the Adirondacks, and can report on the progress made by the young eagles living in the tree growing out of our front porch (prior study in eagles here). There are two offspring, one of each gender as determined by the New York State environmental official who climbed up to the aerie in the spring and banded them. Perhaps not surprisingly, the female is both more developed and more competent and is now learning to fly, apparently without fear. She swooped down into the patch of grass between our house and the lake, and then flitted over to the sitting area behind our old pump house. Her weaker brother, who will probably need a program in remedial raptoring, screeched from the tree above.

Thursday, July 23, 2009

In Defense of Our Much Maligned Healthcare System

By Cardinalpark at 7/23/2009 02:48:00 PM

Why does it seem that our government is intent upon destroying the most extraordinary system of healthcare development, innovation and delivery ever created?

Because we live in a world of limited resources, we have to allocate those resources according to certain rules. In a capitalist system, you do it through the price system. That is how you prevent shortages of goods relative to demand. The price system matches supply and demand. In something other than that, the only way you ration demand is queuing. That is, people have to line up for goods and services (which invariably are underproduced). The most abject example of this was people lining up for bread in the USSR.

So what is the gripe about our system? There are several, but very few are legitimate. For instance, there is a tendency to grouse about the third party payment system (insurance, HMOs) because payers seem to be in business to deny services. For the vast majority of situations, that gripe is frankly nonsense. If people had to pay for things themselves, they would deny themselves services constantly that made little economic sense. It's only with healthcare that people overutilize the insurance system because they will always maximize the spending of somebody else's money if there is even the remotest possibility of a cure for their ailment.

The third party payment system has been augmented by the government over time to address what are perceived to be imbalances in the system for the indigent (because they can't afford even basic care and may be unemployed) and the aged (because they are heavy users of the system and therefore are perceived to need subsidization. That's what Medicaid and Medicare accomplish.

The political raison d'etre for the conversation about universal healthcare is the perception that a large number (how many is hotly debated) of citizens don't have coverage via their employer, Medicaid or Medicare and can't afford private insurance on their own, thus they are uninsured. Let's leave alone the fact that there are many young and healthy people who may elect not to pay for coverage for the simple reason that they don't want to spend the money. There will be some who fail to get coverage and want it. Ok. So what? Is it worth it to change the system for the 260-275mm people for whom it basically works well to help out the 25-40mm for whom maybe it doesn't?

How about this? That's stupid.

If we want to enact some new transfer or insurance product for those people, let's create a public HSA - an insurance product with a low premium and high deductible but which gives people catastrophic coverage. That innovation happens to be rapidly moving through corporations because it is an economically sensible way to motivate people to treat healthcare dollars as though its there money, not somebody else's, and therefore make sensible economic choices about what services to use and which ones to self-deny. In effect, that exists today, it's just inefficiently delivered via the Emergency Room.

Ok, so this piece started out as a defense of our system. Why do I like it so much? Well, let me first say that my parents were both physicians. They were immigrants from Argentina, and they lived in Europe. So I have some perspective on the healthcare payment and delivery systems in Latin America and Europe. As an investor, I have invested with regularity in our healthcare economy.

I like the system because the US has essentially developed the largest and most robust healthcare innovation machine anywhere, ever. From procedures, to medical devices to pharmaceuticals and everything else imaginable, no nation or people anywhere has ever applied chemistry and engineering and biology and medical practice to such productive development in so many areas. We also have an enormous medical delivery infrastructure with which to deliver all of that technology and care.

Do we overproduce healthcare? Probably. The price system does lead to some peculiar things. We develop cures for orphan diseases which are tiny problems in the overall population, though deadly to the patient, because we are willing to pay large sums for those cures. That leads to overspending and some real lack of bang for buck in some instances. On the other hand, we save people from otherwise certain death from conditions like Gaucher's disease. We value every individual life, including those at risk from orpahn diseases.

By contrast, we could save great sums of money if we demanded every citizen maintain an appropriate weight, not smoke or drink. But as a society, we have opted to give people free choice to overeat and smoke.

That's why the debate about the uninsured is BS. Universal healthcare is intended to stop the spending - and that in turn will stop innovation and development. We will underproduce healthcare products and services, and while more people will have "coverage", they will queue for these underproduced services which in turn will also be denied far more regularly than is the case with insurance. Count on it. Americans don't go to the UK and Canada to get healthcare; it's the other way around. Now they may go to Canada to get certain products available in both places more cheaply. But I promise you that product is only available in the first place because it was developed here. The rate of healthcare innovation in the UK and Canada is dwarfed by that of the US. And furthermore, if the US market didn't exist, the rate of innovation around the world would collapse.

We have a great healthcare system. It works for most of our 300 million people, and works pretty well by any sensible historical measure. Yes, it's expensive. Yes, it promotes overutilization via something called moral hazard. We need to develop insurance products and benefits which sensibly allocate economic cost to the consumer of that healthcare so they make intelligent choices (self denial!), just like we do with every other product or service we consume. We should work to provide insurance products as well which provide coverage for those who want it. But let's not kill our system. It cares for us very well and encourages extraordinary innovation. It also employs a huge number of people in generally high quality, well paying jobs. Entrusting the development of a whole new healthcare delivery and payment system to a group of politicians would be insanity.

The "far out, man" tax

President Barack Obama said for the first time that the government might assess new fees against financial companies engaging in what he labeled "far-out transactions," in order to protect taxpayers from future bailouts.

What, exactly, is a "far out" transaction? It is not, man, making mortgage loans and issuing credit cards to people who cannot afford to pay them back, but it is hedging a lender who does such things against losses when those same borrowers default.

Groovy. But -- here's a tip for those few journalists out there who still appreciate the meaning of words -- calling it a "fee" does not make it any less a tax.

Wednesday, July 22, 2009

Cry me a river

"Let's just lay everything on the table," Grassley said. "A Democrat congressman last week told me after a conversation with the president that the president had trouble in the House of Representatives, and it wasn't going to pass if there weren't some changes made ... and the president says, 'You're going to destroy my presidency.'"

Even if Barack Obama actually thought that -- which would be unmanly in the extreme -- why on earth would he say it? And can you imagine George W. Bush ever saying something so degrading?

Yeah, yeah, it is double heresay, but Chuck Grassley lacks the imagination or the cynicism to make something like this up out of whole cloth, so if a lie has been told it was by the "Democrat congressman" in question.

Brush 'em back: Christie leads Corzine by 15 points

By TigerHawk at 7/22/2009 10:27:00 AM

Don't look now, but Chris Christie has opened up a 15 point lead over Jon Corzine in the latest poll. And you don't usually see non-endorsements like this in New Jersey. Something different is going on.

Cred in Iran: More anti-Israeli than thou

Iran's president Mahmoud Ahmadinejad, the man who predicted, promised, or advocated that Israel be "wiped off the map," has just been knee-capped for being soft on Zionism:

Iran's supreme leader ordered the president, a close ally, to dismiss his controversial choice of a top deputy for making pro-Israeli remarks, the semiofficial media reported Wednesday. The move marked a rare split among the country's top conservatives.

The order is a humiliating setback for Mahmoud Ahmadinejad who has strongly defended his decision to appoint Esfandiar Rahim Mashai, his son's father-in-law, as his first vice president.

Mashai angered hard-liners in 2008 when he said Iranians were "friends of all people in the world - even Israelis." Mashai was serving as vice president in charge of tourism and cultural heritage at the time. Iran has 12 vice presidents, but the first vice president is the most important because he leads Cabinet meetings in the absence of the president.

The question, of course, is whether Mashai irritated the mullahs for suggesting that Iranians were friends with Israelis, or that Israelis are people. The linked article is not clear on the point, and either explanation is plausible in the Islamic Republic.

One Iraq, at least for now, Joe Biden notwithstanding

By TigerHawk at 7/22/2009 07:35:00 AM

Before you pick up the Wall Street Journal this morning and look at the front page, indulge me in a hop, skip and a jump down memory lane.

Three years ago, Joseph Biden, then the Senator from Delaware with credibility in certain circles for foreign policy expertise, began shopping a plan to divide Iraq into three "semi-autonomous" regions (bold emphasis added):

It is increasingly clear that President Bush does not have a strategy for victory in Iraq. Rather, he hopes to prevent defeat and pass the problem along to his successor...

As long as American troops are in Iraq in significant numbers, the insurgents can't win and we can't lose. But intercommunal violence has surpassed the insurgency as the main security threat. Militias rule swathes of Iraq and death squads kill dozens daily. Sectarian cleansing has recently forced tens of thousands from their homes. On top of this, President Bush did not request additional reconstruction assistance and is slashing funds for groups promoting democracy.

Iraq's new government of national unity will not stop the deterioration. Iraqis have had three such governments in the last three years, each with Sunnis in key posts, without noticeable effect. The alternative path out of this terrible trap has five elements.

The first is to establish three largely autonomous regions with a viable central government in Baghdad. The Kurdish, Sunni and Shiite regions would each be responsible for their own domestic laws, administration and internal security. The central government would control border defense, foreign affairs and oil revenues. Baghdad would become a federal zone, while densely populated areas of mixed populations would receive both multisectarian and international police protection...

[T]hings are already heading toward partition: increasingly, each community supports federalism, if only as a last resort. The Sunnis, who until recently believed they would retake power in Iraq, are beginning to recognize that they won't and don't want to live in a Shiite-controlled, highly centralized state with laws enforced by sectarian militias. The Shiites know they can dominate the government, but they can't defeat a Sunni insurrection. The Kurds will not give up their 15-year-old autonomy.

Some will say moving toward strong regionalism would ignite sectarian cleansing. But that's exactly what is going on already, in ever-bigger waves. Others will argue that it would lead to partition. But a breakup is already under way. As it was in Bosnia, a strong federal system is a viable means to prevent both perils in Iraq.

By September 2007, just as the Petraeus strategy was showing its first results, Biden persuaded the Senate, including 26 weak-kneed Republicans, to endorse his plan. Notably and predictably, Senator Barack Obama missed the vote.

Remember this as you take a look at the approval ratings of Iraq's Prime Minister Nouri al-Maliki. While there are still significant sectarian differences, the distance travelled is remarkable. Indeed, they compare favorably to the demographic differences in the approval ratings for most American presidents. As the linked article makes clear, sectarian differences in Iraq have not gone away, but neither are the sects forced to unite under Saddam's tyranny or, for that matter, by dint of American arm-twisting. They have, in the main, figured out that they are stronger together than apart, at least under Maliki's surprisingly wise leadership.

Pretty much every American who has ever declaimed on Iraq -- including, by the way, me -- has been substantially and profoundly wrong at some crucial juncture, but we need to remember the extent and recent proximity of Joe Biden's own wrong call because he actually appears to have some influence in the current administration. Hard as that may be to believe.

For a graphical depiction of the progress in Iraq, scroll through the current edition of Brookings' "Iraq Index," which includes page after page of graphs that show the profound progress made in that country in the last two years. It includes the original data for the Maliki approval ratings (p. 50), and the many other security, political, and economic metrics that together paint the picture of victory for the counterinsurgency.

Tuesday, July 21, 2009

Orange is my favorite color, but...

By TigerHawk at 7/21/2009 11:45:00 PM

I think we all know that orange is my favorite color, even more so now that the ThT is a Hokie. Orange, however, is as treacherous as it is bold, and as likely to stab you in the back, sartorially speaking, as flatter you. To wit...

Jackson Browne gets a settlement

By Escort81 at 7/21/2009 04:44:00 PM

Jackson Browne and the Republican Party have settled a lawsuit over the use of his song "Running on Empty" in an Internet ad which ran during the campaign last year. The ad mocked Barack Obama's energy policy proposals. The settlement included an apology from John McCain, a promise from the RNC not to use any songs by any artists without permission, and an undisclosed financial settlement.

Had the suit proceeded, Browne clearly had a strong case and likely would have prevailed. He was correct to assert his intellectual property rights:

"'This settlement is really a great affirmation of what I believed my rights to be, and all writers' rights to be,' Browne said in an interview with The Associated Press. 'One would hope that a presidential candidate would not only know the law but respect it. It was a matter of bringing that issue to bear...'

"...Browne said he hoped the lawsuit and its successful resolution would have an impact on future political campaigns by putting an end to cavalier attitudes about artists' copyrights.

"'I would hope that they would think twice about taking someone's song without permission and understand that the law was put to the test and our rights prevailed,' he said."

The candidate he refers to is Sen. McCain, who actually was unaware of the ad before it was released (it was a negative ad run by the Ohio Republican Party and did not have the usual tag line about the ad being approved by the candidate).

It is good to have Jackson Browne on the side of intellectual property rights (copyrights, in this case, I believe), which are an important subset of individual property rights. I hope that he feels just as strongly about other forms of intellectual property rights -- the patents that pharmaceutical companies receive, the trademarks of major brands, the property rights of software companies and medical device companies, etc. Or is it just big-ticket musicians that he stands with?

From 30 years ago (and noting that David Lindley plays a mean slide guitar):

UPDATE: Thanks to commenter bassdude for directing us to the ASCAP website for information on the song in question. The result that I get from ASCAP is here, and it indicates that Jackson Browne is indeed the sole writer of "Running on Empty," and that his publishing entity, Swallow Turn Music, has retained Wixen Music Publishing as "copyright administrators." Wixen's website is full of information relating to Fair Use, copyrights, parody, etc., and describes the firm as "professional squeaky wheels," so presumably the information there is somewhat tilted toward the holder of the copyright (as zealous advocates for their clients, I would expect nothing less).

Thanks also to the IP lawyer commenting below. I would refer everybody to the language used in the AP article at the link above, by Browne and particularly his lawyer, and to the nature of the settlement itself -- an apology and a promise by the RNC never to use music by any artist in the future without permission, as well as an undisclosed financial settlement (which could be minimal, or just covering legal fees). Without litigating the case here, since we don't have access to the briefs, why would the RNC settle on those terms if Browne did not have a fairly strong case? I am not a lawyer, but my understanding of Fair Use is that the use of music at a political rally would not fall under the most common interpretations of that provision of copyright law. Also, Wixen was retained by Browne, and Wixen goes hard after non-Fair Use performances, so it isn't clear to me whether the scenario that the IP lawyer cites below actually applies here (that is, Browne might be among that select group of big-ticket stars that actually retain more control of their works).

Reading between the lines, I think Browne understands well that most recording stars are Democrats, and he may want to limit the universe of music that will be available to the RNC to rally the troops. For someone with Browne's long history of political activism (stretching back to Vietnam, No Nukes, U.S. out of El Salvador and Central America generally, etc.), there probably is no amount of money that he would accept from the RNC to permit the use one of his songs. Knowing Browne's quasi-socialist views, I was gently trying to poke at his just assertion of IP rights, guessing that his general views on non-"artistic" personal property rights might not be as robust. But, at the very least, we have him making this righty-sounding economic statement:

"'If you don't uphold the law that allows people to make a living from this, the result is you won't have people able to do this work,' Browne said."

So, hopefully, no such hypocrisy exists in Jackson Browne's views about all personal property rights. Finally, the AP article did mention that Sam Moore asked the Obama campaign to stop using "Soul Man."

Liberal suicide watch

By TigerHawk at 7/21/2009 09:38:00 AM

David Brooks is rather good this morning, the usual stuff to irritate conservatives notwithstanding.

It was interesting to watch the Republican Party lose touch with America. You had a party led by conservative Southerners who neither understood nor sympathized with moderates or representatives from swing districts....

It’s not that interesting to watch the Democrats lose touch with America. That’s because the plotline is exactly the same. The party is led by insular liberals from big cities and the coasts, who neither understand nor sympathize with moderates. They have their own cherry-picking pollsters, their own media and activist cocoon, their own plans to lavishly spend borrowed money to buy votes.

This ideological overreach won’t be any more successful than the last one. A Washington Post-ABC News poll released Monday confirms what other polls have found. Most Americans love Barack Obama personally, but support for Democratic policies is already sliding fast....

Most independents now disapprove of Obama’s health care strategy. In March, only 32 percent of Americans thought Obama was an old-style, tax-and-spend liberal. Now 43 percent do.

We’re only in the early stages of the liberal suicide march, but there already have been three phases. First, there was the stimulus package. You would have thought that a stimulus package would be designed to fight unemployment and stimulate the economy during a recession. But Congressional Democrats used it as a pretext to pay for $787 billion worth of pet programs with borrowed money. Only 11 percent of the money will be spent by the end of the fiscal year — a triumph of ideology over pragmatism.

Then there is the budget. Instead of allaying moderate anxieties about the deficits, the budget is expected to increase the government debt by $11 trillion between 2009 and 2019.

Finally, there is health care. Every cliché Ann Coulter throws at the Democrats is gloriously fulfilled by the Democratic health care bills. The bills do almost nothing to control health care inflation. They are modeled on the Massachusetts health reform law that is currently coming apart at the seams precisely because it doesn’t control costs. They do little to reward efficient providers and reform inefficient ones.

The House bill adds $239 billion to the federal deficit during the first 10 years, according to the Congressional Budget Office. It would pummel small businesses with an 8 percent payroll penalty. It would jack America’s top tax rate above those in Italy and France. Top earners in New York and California would be giving more than 55 percent of earnings to one government entity or another.

Nancy Pelosi has lower approval ratings than Dick Cheney and far lower approval ratings than Sarah Palin. And yet Democrats have allowed her policy values to carry the day — this in an era in which independents dominate the electoral landscape.

Who’s going to stop this leftward surge? Months ago, it seemed as if Obama would lead a center-left coalition. Instead, he has deferred to the Old Bulls on Capitol Hill on issue after issue.

Machiavelli said a leader should be feared as well as loved. Obama is loved by the Democratic chairmen, but he is not feared....

Nancy Pelosi has "far lower approval ratings than Sarah Palin." If that does not drive liberals insane, what would?

My whereabouts

By TigerHawk at 7/21/2009 07:17:00 AM

Do orange and purple really go together? I have my doubts, but for the sake of the TigerHawk Teenager I'm willing to go with it. I even have a "VTDad" decal on my car and had to buy an orange and purple sweatshirt yesterday because it was so cool. People are going to talk.

Yes, the ThT and I are in Blacksburg for his orientation, which fact accounts for the light blogging yesterday. My excuse for Saturday and Sunday is less grand -- simply the first really nice weekend weather we have had all summer. Saturday I rode my bike from Princeton to Lambertville, the quaint little be-antiqued town just across the Delaware from New Hope. It turns out that the route includes a great many hills that are not so obvious from inside a car, so by the time I made it home I had put in 44 hill-and-dale miles and was much the worse for wear. Only Advil and India pale ale at the Triumph Brewery kept me from turning into a ball of pain.

Anyway, back to Blacksburg. The ThT had been on a "road trip" to Florida, and through the magic of GPS actually connected with us in Blacksburg at the appointed hour, an impressive feat of driving and punctuality. I hit the road a little after six yesterday morning and got down here by three in the afternoon, which was decent time in light of the massive amount of construction along the way. It seems that President Obama's stimulus money is making itself felt on interstate highways all over. Route 66 west from Washington to Front Royal passes through Gainesville, where construction crews have narrowed it from four lanes to only one for no obvious reason other than their own safety. Selfish bastards cost me an hour. But the drive also had its great moments: Interstate 81 in the Shenandoah Valley must be one of the most beautiful roads in the eastern U.S., and yesterday it was especially so. The mist hung mysteriously over the little dales in the Blue Ridge; you could almost picture the moonshiners at work under its cover.

Blacksburg is a very nice college town up in the Appalachian foothills, and it is so cool here that I had to buy that sweatshirt just to stay warm. Sort of remarkable weather for the 20th of July just 100 miles from Tennessee, but I'm sure Al Gore has an explanation. The campus is attractive -- not spectacular, like the University of Virginia, but better than average among the state tech schools I've seen. The THT should like it well enough here, or even more than that. You do not meet many indifferent Hokies, which speaks well for the place.

Virginia Tech is famous for a number of things in addition to spontaneous insanity, among them its excellent cafeteria food. We had dinner in Dietrick last night -- late afternoon, actually -- and dined on quite delicious beef fajitas, refried beens, and chips drizzled with a sort of cheesy chipotle sauce. If you did not want that you could have Asian or Italian food or hunks of meet grilled under the influence of various seasonings. It actually lived up to its billing, and a far cry indeed from the Princeton "Commons" of 1979. Of course, virtually all food everywhere is better than it was in 1979, so the "kids today" are probably a lot more demanding than we were. It s still nice to know that your kid won't be living off of Ramen noodles and peanut butter.

If all goes well today we will roll north around two this afternoon, which ought to get me home well before midnight even taking the stimulus package into account.

Accord

Henry Louis Gates arrested

By Escort81 at 7/20/2009 02:58:00 PM

Henry Louis Gates, Jr. was arrested today while trying to gain entrance into his locked house near Harvard University, where he teaches. Dr. Gates is a leading African-American scholar, and was among the first recipients of the MacArthur Fellows Program "Genius Awards" in 1981.

"Police say they were called to the home Thursday afternoon after a woman reported seeing a man try to pry open the front door.

"They say that they ordered the man to identify himself and that Gates refused. According to a police report, Gates then called the officer a racist and said, 'This is what happens to black men in America.'"

I understand that Dr. Gates might have a philosophical problem with identifying himself to the police, but in that particular circumstance, wouldn't the police actually be able to assist him? In that situation, I would say, "Great to see you, officer, I've locked myself out. My name is Mr. 81, and I can provide you with a photo ID once I'm in the house. There's a second story window open if you can get up there and through it, and then walk downstairs and open the door."

Whatever legitimate issues or grievances Dr. Gates might have with the history of the Boston or Cambridge police, this incident sounds as though it was entirely avoidable (setting aside for the moment that it is possible that the woman making the report may or may not have made the same report had she seen a white man trying to pry open the front door). If Dr. Gates had ID on his person, he could have presented it and then asked the police to leave, unless they had a warrant. If he wanted access to his house, they possibly could have helped, perhaps even contacting a locksmith for him (if he did not have a mobile phone with him).

I have spent a fair amount of time in Cambridge over the past decade, and it is one of the most politically correct towns in America. Accusing the police of being racist because Dr. Gates wouldn't identify himself -- given the circumstances of being observed trying to pry open a door -- strikes me as kind of silly, particularly for a smart man. Dr. Gates is a respected scholar with a nice income (much greater than anyone in the police department) and a tenured position. Does he really need to prove a legal point about responding to an ID request or possibly creating a incident where there need not be one? This appears to be creating a mountain out of a mole hill, and I say that as a blogger who has posted about DWB incidents, so, as always, I try to call 'em as I see 'em. Or am I just a white guy with no clue?

UPDATE: The Harvard Crimson story has more details than the AP report linked above. There are also additional descriptions of the incident in the comments. The arrest was for disorderly conduct after Dr. Gates had gained access to his house (and provided his Harvard ID after initially refusing), and then went back out onto the porch as an argument progressed with a police Sergeant. The woman who first made the call to the police observed "two black males with backpacks on Gates' porch attempting to force entry through the front door," though it is unclear from the police report whether either person was Dr. Gates (a Crimson commenter states that it was Gates and his taxi driver.) Once Dr. Gates had established his ID, I am not sure why he simply didn't ask the police to leave his property, rather than continuing to argue with them, including a quite incendiary "mama" comment he made as a policeman was exiting the front door. Such behavior does appear to be out of character for Dr. Gates.

UPDATE #2: The follow-up AP piece provides more details, and also indicates that Dr. Gates was not in good health, having some sort of infection. The woman who reported the incident to police is an employee of Harvard Magazine, which has its offices down the street from the residence. Police arrived after Dr. Gates was in his house, so it is still unclear why there needed to be an incident. In that situation, I would have produced my photo ID upon request so that the policeman could be on his way and attend to more important matters. The policeman should have left as soon as he established that the man in the house was Dr. Gates and that he was the resident, regardless of the tone of the conversation at that point. So, there is some responsibility for this incident on both sides of the equation. Thanks to Anon 11:45, here is the link for Charles Ogletree's statement on behalf of Dr. Gates, noting that the statement omits the part in the AP article stating that Dr. Gates initially refused to provide a picture ID (which perhaps was a trigger for the entire blow-up).

UPDATE #4: For those commenters desperately seeking Christopher Chambers, he kindly provided this link (in a comment to a post above) to an article in The Root written by Dr. Gates' Harvard colleague, Lawrence Bobo. Both the article and the comments are worth reading, and there is a good picture of a very nice Cambridge house.

Sunday, July 19, 2009

Pray for Bowie Bergdahl

The U.S. military denounced on Sunday the release of a video showing a soldier captured in Afghanistan, describing the images as Taliban propaganda that violated international law.

The video shows Private Bowe Bergdahl in traditional Afghan dress, being prompted in English by his captors to call for U.S. forces to be withdrawn from Afghanistan.

I will be curious to see if any lefty blogger argues that the Taliban would not have done this were it not for American "war crimes." If you see anything along those lines, dump the link in the comments. And in the meantime, pray for Bowie Bergdahl, who is in a very tight spot right now.

What's the ante in war?

By Escort81 at 7/19/2009 12:16:00 PM

In most forms of poker, and many other card games, there is an "ante" -- a chip the player puts on the table before the cards in a hand are even known. It shows that you have some skin in the game as a player, that if you want to play, you stand to lose at least the amount of the ante, and more if you bet more as the hand progresses.

If the country of Freedonia (with apologies to Groucho Marx) is attacked by the neighboring country of Youristan and several of its allies, and Freedonia successfully repels the attack, and pushes back the attackers deep into their own territory, and captures and holds some of the key strategic ground from which the attack was launched, why is it a bad thing that Freedonia maintains control over a small segment of that ground? Shouldn't there be some kind of ante in war, such that the leaders of Youristan know that if their aggression is ultimately unsuccessful, that some physical ground will be lost? It seems to me that an ante acts as somewhat of a reality check on planned aggression -- if the Youristani leaders understand that their payoff matrix is a little more negative, they might be less inclined to attack in the first place. If they believe that the international community -- and even Freedonia's key ally -- will demand that any Youristani territory lost to Freedonia (as a result of the Freedonia defensive counterattack) be returned to Youristani control, then all that is at risk to the Youristani leadership are some troops and equipment, and they might keep attacking multiple times over the course of several decades, kind of whenever they feel like it.

"Israel on Sunday rejected a U.S. demand to suspend a planned housing project in east Jerusalem, threatening to further complicate an unusually tense standoff with its strongest ally over settlement construction.

"Israeli officials said the country's ambassador to Washington, Michael Oren, was summoned to the State Department over the weekend and told that a project being developed by an American millionaire in the disputed section of the holy city should not go ahead.

"Settlements built on captured lands claimed by the Palestinians have emerged as a major sticking point in relations between Israel and the Obama administration because of their potential to disrupt Mideast peacemaking."

Understanding that things are never simple in the Mideast, and logic does not always (or even usually) apply, why would the Obama administration's State Department summon the Israeli ambassador to try and red light a real estate development project in East Jerusalem? Don't these kinds of overt hardball tactics ultimately have some domestic consequences? I suppose such consequences are hard to estimate, but what are the potential political costs to President Obama of perhaps a 10% reduction in the Jewish vote (and a corresponding reduction in contributions from the same segment) in 2012, as well as the 2010 midterms?

Saturday, July 18, 2009

Terror interrogation unit

By Escort81 at 7/18/2009 08:49:00 PM

The AP is reporting that a "special unit" of interrogators is in the planning stages:

"The Obama administration is considering creating a special unit of professional interrogators to handle key terror suspects, focusing on intelligence-gathering rather than building criminal cases for prosecution, a government official said Saturday.

"The recommendation is expected from a presidential task force on interrogation methods that plans to send some findings to the White House on Tuesday."

In terms of the old honey vs. vinegar spectrum, the new unit would presumably err on the side of honey and talk very nicely to key terror suspects to extract information from them. Maybe Hollywood starlets would be brought in to seduce important intelligence out of their mouths; alternatively, they could stick the suspects in a clean, well-lit room with Vice President Joe Biden until they break -- that might take all of 20 minutes or so.

I think that President Obama will catch flack from the left wing of his base, because it seems to be a reasonable inference that if the emphasis is not going to be on "building criminal cases for prosecution," then these suspects may well fall into the prolonged detention or "Group Five" cases. Following President Obama's speech in May on the Gitmo detainees, MSNBC's Rachel Maddow went off on the new President:

"One civil liberties advocate told The New York Times today, quote, 'We've known this was on the horizon for many years, but we were able to hold it off with George Bush. The idea that we might find ourselves fighting with the Obama administration over these powers is really stunning.'

"And it is stunning. Particularly to hear President Obama claim the power to keep people in prison indefinitely with no charges against them, no conviction, no sentence, just imprisonment—it‘s particularly stunning to hear him make that claim in the middle of a speech that was all about the rule of law."

It's worth reading more of what she said on air back in May -- she really looked as though she was terribly upset. Alternatively, it could all be a feint to make President Obama appear to be centrist -- catch some orchestrated pretend grief from the left so that he can appear tough against terrorism man-made disasters, kind of a reverse Sister Souljah moment.

Friday, July 17, 2009

Health care reform bonus!

By TigerHawk at 7/17/2009 11:55:00 PM

I suppose it should not surprise us that the House Democrats slipped in a gift to the trial bar in the health care reform legislation just passed. Fortunately, the bewhipped Republicans in the Senate not only spotted the provision but worked up the mojo to put it on ice, at least for the time being. Yet another reason why no representative in this Republic ought to vote on legislation he or she has not read. There's too much sneaky stuff in there.

Caption this: New Jersey gubernatorial edition

By TigerHawk at 7/17/2009 11:24:00 PM

Barack Obama made an unusual mid-summer campaign appearance for New Jersey Governor Jon Corzine, who is, Allah forfend, behind the Republican. The original caption reads: "U.S. President Barack Obama and New Jersey Governor Jon Corzine embrace after Obama spoke at a rally for Corzine in Holmdel, NJ, July 16, 2009." Yeah. Right. As if the word embrace didn't require mutuality. Have you ever seen anybody hang on for dear life like Jon Corzine in this photo?

Arianna's delight

By Escort81 at 7/16/2009 01:13:00 PM

Arianna Huffington is full of joy that yesterday's Wall Street Journal editorial, titled "A Tale of Two Bailouts," spoke in less than glowing terms about Goldman Sachs. She thinks that it shatters the "left vs. right prism" with respect to financial regulatory policy.

Goldman doesn't need any help from a lowly blogger to defend itself, but the fact that it has been nimble enough to post very healthy profits during the second quarter (largely attributable to its trading activities) in an otherwise difficult business environment would make me think that the firm has a great number of very smart people working there, regardless of whether one believes that there is an explicit or implicit federal government guarantee behind it:

"Meantime, Goldman's own credit spreads over Treasurys have narrowed as the market has priced in the likelihood that the government stands behind the risks it is taking in its proprietary trading books.

"Goldman will surely deny that its risk-taking is subsidized by the taxpayer -- but then so did Fannie Mae and Freddie Mac, right up to the bitter end. An implicit government guarantee is only free until it's not, and when the bill comes due it tends to be huge. So for the moment, Goldman Sachs -- or should we say Goldie Mac? -- enjoys the best of both worlds: outsize profits for its traders and shareholders and a taxpayer backstop should anything go wrong."

I don't know, maybe this is a WSJ taunt directed at the Obama administration trying to goad it into not rescuing Goldman, should the need arise at some point in the near future. I don't think that such a need is likely, nor do I think that it would be politically feasible now. Goldman should do well -- or not -- on its own.

Certainly Goldman had the benefit of a great deal of bailout money flowing through the zombie AIG conduit, as did other financial institutions who happened to be on the correct side of a contract with AIG (and not imagining that there was a significant counterparty or credit risk when the bet was made). Once the decision was made to cover AIG's bad bets, so that the firm as a whole would not collapse rapidly, perhaps resulting in an insurance crisis and a real business crisis, Goldman was helped, and the fact that its former chairman pushed through that decision while he was Treasury Secretary makes people wonder.

I am not so sure, however, that a "taxpayer backstop" exists for Goldman's trading activities, as we sit here in July 2009. Is there anyone out there on a trading desk who wants to share some first-hand knowledge of how other traders view Goldman right now?

Brushing them back in New Jersey: Christie widens his lead over Corzine

By TigerHawk at 7/16/2009 10:55:00 AM

Forty-nine states have elected a Republican to state-wide office since New Jersey last did, and the Garden State is, by some metrics, the "bluest" in the land. If Chris Christie, not the most inspiring Republican ever to win a nomination, beats Jon Corzine it will put fear in the heart of every Democrat with a swing constituency. That is why the latest post results are so significant.

President Obama will be here today to campaign for Governor Corzine, investing his personal prestige in a candidate who may fail. But it is summer. Will Obama come back in the fall when it really matters, or leave Corzine to twist in the wind?

Hypocrisy watch

By TigerHawk at 7/16/2009 10:01:00 AM

If it is wrong for a solvent financial institution that took TARP funds at the request of the government to hold a sales conference in Las Vegas, why is it just fine for a structurally insolvent government agency to hold a retreat at the Biltmore in Arizona? The difference in press coverage is particularly difficult to explain.

CWCID: Glenn Reynolds, who writes "Remember, it's only bad when companies do it."

Is the bloom...

The health care bill: Goodies for all

By TigerHawk at 7/16/2009 07:34:00 AM

Senator Christopher Dodd (D-Countrywide) makes the Democratic case for the bill just reported out of the Senate Committee on Health, Education, Labor and Pensions:

“If you don’t have health insurance, this bill is for you,” said Senator Christopher J. Dodd, Democrat of Connecticut, who presided over more than three weeks of grueling committee sessions. “It stops insurance companies from denying coverage based on pre-existing conditions. It guarantees that you’ll be able to find an insurance plan that works for you, including a public health insurance option if you want it.”

The bill would also help people who have insurance, Mr. Dodd said, because “it eliminates annual and lifetime caps on coverage and ensures that your out-of-pocket costs will never exceed your ability to pay.”

Insure the uninsured in a plan "that works for you," eliminate all caps on coverage, and "ensure" that your out-of-pocket costs "will never exceed your ability to pay." Well, who could possibly be against that? Oh. Right. Forgot about that.

I especially love the last bit: "Out-of-pocket costs will never exceed your ability to pay." Is that your ability to pay at the moment you get the invoice, or your ability to pay had you led a life of industry and thrift? Christopher Dodd, who would not know industry and thrift if Ben Franklin's ghost whacked him upside the head, undoubtedly means the former. The thrifty industrious people will be paying for all of this. (Oh, you supporters of this travesty should by all means tell your anecdote about the hard-working guy who was wiped out by medical bills, because that would be a good reason to restructure 17% of GDP from the White House.)

Wednesday, July 15, 2009

Snarky partisan graphic of the day

Tank watch: Why didn't television show the presidential pitch?

By TigerHawk at 7/15/2009 06:52:00 AM

The ambition of the national mainstream media to promote Barack Obama's cool rather than show the American public the ups and downs of a normal man has now, if it had not already, jumped the shark. Sheesh.

Thousand words

In the red

Bizzyblog (via Instapundit) summarizes the second quarter tax receipts, following today's Treasury report for the month of June:

I think this is what is referred to in business as "falling off a cliff," when cash receipts diminish greatly and rapidly.

Gulp.

The problem with having an MBA is that your mind is trained to reduce expenditures and cash disbursements in such a situation, when clearly, the correct solution (we know this from the people who have Masters in Governmental Affairs, or some such equivalent degree, who are currently in charge) is to massively increase spending. A 31% drop in 2Q receipts 2009 vs. 2008, and we are going pedal to the metal in spending -- not just a tweak of federal spending, but testing the outer limits of our debt capacity by any absolute or relative measure. What happened to the self-description of Democrats being the "reality-based" party?

Where's that reset button again?

By Escort81 at 7/14/2009 12:19:00 PM

President Obama was in Russia last week, and even tried to give the Russian people partial credit for ending the Cold War peacefully, but the effects of Smart Diplomacy don't seem to be all that different from regular old diplomacy. AP reports:

"A U.S. warship anchored off Georgia for joint military exercises Tuesday while Russian jets pounded mock targets nearby in a sign of lingering tensions over the former Soviet nation turned U.S. ally.

"The U.S. and Russian maneuvers marked a stark change in tone from meetings last week between President Barack Obama and Russia's Dmitry Medvedev, who expressed hope for repairing relations that have sunk to a post-Cold War low.

"During meetings in Moscow last week, Obama warned Moscow to respect the territorial integrity of Georgia and reject the notion that it holds a zone of privileged interest among its former Soviet neighbors. Russia praised the U.S. administration, but made no concessions in its long-running dispute with the West over its role in the post-Soviet space."

Let's give it another year or so, but it will hopefully sink in to the majority of Americans that from the perspective of many foreign leaders and their peoples, it does not matter greatly who the President of the United States is at a particular point in time -- the U.S. has its set of interests and other countries have their objectives, and sometimes there is common ground, and sometimes there is friction. That is not a knock against President Obama per se (only those around him know how coldly realistic or woefully naive he really is), but it is a reminder to that segment of the electorate who might vote for a candidate partly because of the belief that simply recasting the superficial image of the country might actually result in a sudden and meaningful change in the various national interests around the world.

Man on the Moon

By TigerHawk at 7/14/2009 07:03:00 AM

Forty years ago today, mankind stormed the moon.

We have not done enough since.

DAMN: As many commenters have pointed out, I blew the date. Only an aneurysm could account for an error that massive, so if you never hear from me again you know why. On the bright side, it is a great video! And thank you for being so courteous about it.